New York State Passes New Healthcare Trade Notification Requirement

The new notification requirements, which apply to transactions on or around August 1, 2023, require the state to collect data and assess the value of health care transactions involving private equity and investor-backed entities. May act as a mechanism for making requests. Under the “Health Equity” rubric (aligned with recent changes to Certificate of Needs for Licensed Facilities (“CON”) requirements), it will increase public transparency regarding such transactions. The law could also lay the groundwork for adopting more onerous approval requirements in the future.

A detailed explanation of the law and what it means for medical transactions in New York can be found below.

review process

Definition of significant transactions. The new law defines a “significant transaction” in the same way as Governor Ho-Chol’s first proposed bill:

1. merger with a medical institution;
2. Acquisition of one or more healthcare entities, including, without limitation, any transfer, sale or other transfer of assets, voting securities, membership or partnership interests, or transfer of control.
3. Affiliation agreements or agreements entered into between a healthcare provider and another person.again
4. Partnerships, joint ventures, accountable care organizations, parent organizations, for the purpose of administering contracts with health insurance, third party administrators, pharmacy benefits administrators, or health care providers as prescribed by the Commissioner by regulation; Or the formation of a management service organization.¹

Exclusion from Review. The law excludes the following transactions from review, and specifically adds exclusions for “de minimis” transactions that were not included in previous versions of the bill.

1. A clinical alliance of medical entities formed for the purpose of facilitating cooperation between entities.
2. Transactions that are subject to the CON process or insurance company approval process under New York State public health or insurance law.and
3. “De minimis” transactions. It is defined to mean a transaction or series of transactions that causes a health care entity to increase his gross state revenue by less than $25 million ($25 million).²

Definition of Healthcare Entity. The definition of “healthcare entity” includes any entity that is managed or administered under an agreement with a physician practice, physician group, administrative service organization, or organization sponsored by one or more physician practices, healthcare providers, or healthcare providers. Includes similar entities that provide all or substantially all of the Services. An insurance plan or other type of medical facility, organization, or plan that provides medical services in New York. However, the law expressly excludes licensed New York insurance companies and pharmacy benefits administrators from the definition.³ It is also important to note that, so far, only New York State has included a managed services organization in its statutory definition of a healthcare entity subject to these trade review laws.^Four

Notification requirements. Healthcare providers that receive significant transactions must provide DOH with written notice at least 30 days prior to the closing date of the transaction.^Five The notification and review process is further defined in regulations made by the DOH. The written notice must include the following elements:

1. the names and addresses of the parties to the transaction;
2. a copy of the final agreement;
3. Location affected by the transaction.
4. Plans to reduce or discontinue services, or plans to participate.
5. Closing date; and
6. A description of the purpose of the transaction, including:
   1. Expected impact on cost, quality, access, health equity and competition in affected markets. This may be supported by data and formal market impact analysis.and
   2. Commitment by healthcare organizations to address anticipated impacts.⁶

Upon submission, DOH will forward the notice and supporting documentation to the Office of the New York Attorney General’s Office of Antitrust Medical and Charity.⁷ The DOH will also post on its website a summary of the transaction, a description of groups that may be affected, information about how the transaction will affect the delivery of services by health care providers, and details on how to submit comments. To do.⁸ The healthcare entity must also notify the DOH in a form later defined by the DOH upon completion of the transaction.⁹

Consequences of non-compliance

To ensure penalties for non-compliance ensure compliance, the law authorizes the DOH to impose civil penalties of $2,000 for each day a transaction fails to comply. This fine can be increased up to $5,000 for subsequent violations representing a “serious threat to the health and safety” of an individual.^Ten Each day after a violation is another violation. Penalties may be extended until and possibly forever unless notice is filed.

Parallel legislation in other states

As previously highlighted, New York legislation follows the emergence of similar legislative efforts in many states that have imposed notification, review, and/or approval requirements for health care transactions. A sample of recently enacted legislation includes:

Several other states have followed suit and recently introduced legislation proposed in the following states:

• Illinois We are considering a bill (House Bill 2222) that would require provider organizations and medical facilities to provide 30 days’ notice of closing to the Office of the Attorney General for proposed transactions.
• maine We are considering a bill (HB 894) that would require 60 days’ pre-closing notice and approval from the state attorney general’s office for significant healthcare transactions.
• north carolina is considering a bill (Senate Bill 16) that would require hospital entities and all entities affiliated with hospital entities to provide 90 days’ notice of closing to the Office of the State Attorney General for proposed transactions. increase.
• Minnesota is considering a bill (HF 402) that would require healthcare providers to notify state attorneys general and health secretaries at least 90 days before a covered transaction is completed.
• Washington is a bill that seeks to expand the scope of the current review process in Washington, including extending notice periods, expanding the scope of entities subject to notice requirements, and increasing the executive powers of state attorneys general (Senator Bill 5241). I am considering.

impact and meaning

Although the legislation enacted has only partially delivered on what Gov. states willing to join a growing list of states in an effort to impose disclosure requirements on Not previously captured under the state regulatory system. By mandating the posting of transaction summaries and other transaction information online and soliciting public comment, the new law will ensure that proposed healthcare transactions, especially those previously reported under other states’ regulatory regimes, are not reported. It will undoubtedly increase scrutiny for transactions that were not

Going forward, it will be important to follow the regulatory rulemaking as more details regarding the DOH notification and review process will be provided. We encourage healthcare entities, including private equity-backed entities and managed service organizations, to closely monitor this and other similar new national legislation.

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